As first quarter results roll off the printing presses, herd mentality and group-think are to the fore. Daimler, PSA and Volvo yesterday posted weaker than expected and smaller than last year numbers, saying operations in China were at the heart of the problem. More surprising perhaps was that Wall Street royalty 3M yesterday produced poor Q1 figures, saying it would cut 2000 jobs as part of its restructuring, also cutting earnings forecasts; shares fell 13 per cent to $190.72. Yesterday giant Caterpillar posted weak numbers suggesting Asia Pacific sales weren’t up to scratch.
In after-hours trading on Wednesday Microsoft briefly entered the $1 trillion club, joining Apple and Amazon, as its shares hit a new high at $130.87. This reflected a 14 per cent increase in revenue and 19 per cent in profits.
DAX 30
An inside day yesterday has done nothing to correct the very overbought situation. Remember that Spain goes to the polls on Sunday with no clear leader in the polls, a very undecided electorate, and the far-right Vox party in the ascendant. Could be very messy.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
FTSE 100
You can gauge just how overbought this was when, after two, small, consecutive daily declines the RSI has dropped from 86.7 to 61.9.
SHORT TERM TRADER: Might try another small short on a close below 7400 this evening.
POSITION TAKER: Square.
S&P 500
Still overbought. Note that as from tomorrow Japan will have a 10-day holiday (back to work May 7th), one of its longest ever. This is to mark Emperor Akihito’s abdication, itself a first, I think, the start of the Reiwa era as Crown Prince Naruhito ascends to the Imperial Throne on the 1st May. All markets and businesses will remain closed and there are worries that ATM machines might run out of cash.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Steadying, with a tiny hammer, as it tries to cling to 50 per cent retracement support.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
EURO/US DOLLAR
Trying to hold at some random level while keeping momentum marginally bearish. Yesterday President Macron laid out his plans to revive his flagging status. These included tax cuts, a longer working week, and tweaks to the civil service. French media have offered a mixed response. Let’s see what happens tomorrow among the gilets jaunes.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
Bearish momentum easing as prices sneak above the neckline of the head and shoulders top.
SHORT TERM TRADER: Short at 1283; stop above 1290. Next target 1260.
POSITION TAKER: Short at 1292; stop above 1290. Target 1185.
